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Russian "Urals" oil heads to Asia at the highest rate in 23 months, as European purchases decline

Russia's premium Urals crude oil is increasingly heading towards Asia after European importers cut purchases following the invasion of Ukraine and international sanctions aimed at isolating Moscow.

Asia will buy about 1.24 million tons of this type of oil that was loaded in March, the highest amount compared to all months following April 2020, according to tanker tracking data compiled by Bloomberg and port agent reports.

This amount is equivalent to about 293,000 barrels per day. It is also more than double the amount loaded in February of 550,000 tons of crude.

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While Russian crude itself is largely not subject to official sanctions, many Western companies are shying away from it, in part due to confusion over what is or isn't allowed, reputational concerns and uncertainty about future restrictions.

Urals oil has been selling at record discounts in recent weeks, and barrels of oil are flowing eastward.

A large amount of Russian crude will be refined in India's plants, with purchases rising to their highest level since at least October 2018, when Bloomberg began tracking shipments to Asia from Russia's three western ports.

"OPEC" excludes the data of the International Energy Agency

It is likely that an additional amount of "Ural" oil will head to Asia, as two giant tankers, each of which can carry two million barrels of crude, are currently in Europe to load shipments on them from smaller ships.

Meanwhile, European oil refineries - which have long been the main destination for Russia's Urals crude - have been reducing purchases since the start of Russia's invasion of Ukraine.

About 4.4 million tons of Ural oil is heading to Northwest Europe and the Mediterranean this month. This amount represents about 60% of the loads, down from an average of 83% of the loads last year.

 

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